Two stories in The Australian Financial Review and other papers this morning illustrate just how out of touch the Australian trade union movement is, and how unconnected the AFR‘s reporting is as well.

On the top of page one of The AFR, the headline screamed “Unions push for job loss insurance”, with the lead paragraph reporting:

“Unions are seeking Rudd government support for a radical new unemployment insurance scheme as they switch their political strategy ahead of the next federal election from workplace bargaining to the economic security of workers.”

Then on page three, the paper reported the Organisation for Economic Co-operation and Development (OECD) “Australia to star in OECD ranks” that the organisation was now forecasting that Australia’s unemployment rate would peak at just 6.3% next year, compared with the 6.75% estimate from the federal government and the current rate of 5.8%.

The OECD forecast for Australian unemployment is far lower than the forecast OECD average peak of 9.1%. And with only a modest global recovery forecast for the coming year, the OECD reckons an extra 21 million people could be out of work across the member countries by the end of next year.

But in Australia, the number of people unemployed will rise by just 0.5%, or at worst 50,000 over the next few months.

And that rise will come from the economy not generating enough jobs to match the growth in the size of the labour market, not job losses. The labour shedding cycle is over in Australia.

The economy is not expected to start growing faster than the rate of increase in the labour market (just over 2% a year) until later in 2010 and into 2011 when the OECD says the economy will be growing at about 3.5%.

So the ACTU and other unions are ignoring these falling estimates for unemployment to try and push the spurious line that job security remains a problem.

And how do they plan to help jobs security: by pushing for job loss insurance.

From the AFR’s report, the paper has been fed the ACTU’s policy line and swallowed it hook line and sinker and not bothered to point out in the report that the union movement is well behind what’s happening in the wider economy. Job losses have slowed and 65,000 new jobs were created in September and October.

The unions want to use part of the superannuation guarantee to be paid as a premium for unemployment insurance; they claim it will be self-funding over “a business cycle” and how long is that? But they also want it underwritten by the federal government (i.e. taxpayers).

The real problem for Australia isn’t the need for pay rises or insurance, it’s the need for re-skilling and new trades people to be found to meet the returning resources boom.

Principally because of the $43 billion Gorgon LNG project, the Australian Bureau of Agricultural and Resource Economics reported this week that the value of advanced mineral projects had soared 40% in the six months to October to $112 billion.

Chevron, Exxon Mobil and Royal Dutch Shell agreed in September to proceed with the Gorgon venture located off north-western Australia. This project is huge. Leighton Holdings revealed this week it had won a tender as part of a consortium to build the main jetty and associated works for Gordon: the value $900 million. Leighton is already involved in building a work camp and accommodation for the project that will cost half a billion dollars.

ABARE said the $112.5 billion is spread across 74 advanced projects, defined as being under construction or committed, of which 38 are energy projects, 31 are minerals projects and five are mineral processing projects.

Energy projects account for about 72%, or $81.1 billion, of the estimated capital cost of all listed advanced major projects.

Iron ore projects account for a further 15% or $16.8 billion. Because of Gorgon, and the iron ore projects, WA accounts for about 83% of the capital expenditure on advanced projects.

Unemployment will not be a problem, just getting enough trained and skilled workers in place in WA to handle years and years of work. It’s about time the unions (and the slack Rudd government) woke up and looked at the looming problems in this area.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey